Medium Term Review: 2003-2010

July 18, 2003

News

18/07/2003

 

Medium Term Review: 2003-2010

EMBARGO: 18/07/2003, 00:01 am.

Authors: Adele Bergin, Joe Cullen, David Duffy, John Fitz Gerald, Ide Kearney, and Danny McCoy



The ESRI is publishing its latest Medium-Term Review of the Irish economy on July 18, 2003. This Review is published every second year, providing a comprehensive analysis of the prospects for the Irish economy over a seven-year time horizon.



Some of the main findings of this Medium Term Review include:

 

 

  • The economy is quite strong. While in the short-term the outlook is very uncertain, the Irish economy remains fundamentally healthy. In the medium term it has the potential to grow at 5 per cent a year. Any underperformance in the next two years is likely to be matched by a subsequent spurt of activity, returning the economy to its trend growth path from 2005.
  • Services are the activity of the future. The market services sector will play a gradually increasing role in raising output and employment. In the medium-term, less output and employment growth will come from the manufacturing sector. The building sector will not grow significantly, with some fall in output likely later in the decade.
  • Competitiveness and infrastructure deficit the major challenges. A failure to maintain Ireland’s external competitiveness and a failure to deliver the necessary improvement in infrastructure could seriously affect growth in the medium term. A further substantial appreciation of the euro could also pose serious problems for the Euro area and the Irish economy. However, there remains the possibility that the actual outturn would be better than forecast, fuelled by skilled immigration and further infrastructural investment.
  • Key priorities for policy are: Tackling the infrastructural constraint on growth remains urgent. Development policy needs to adjust to take account of the changing roles of manufacturing and services.

The current very substantial investment in infrastructure, funded out of taxation, will benefit future generations. Investment in financial assets in the national pension fund is probably better undertaken when the infrastructural deficit has been dealt with some time in the next decade.

Members of the Press are invited to attend a Briefing at the ESRI offices, 4 Burlington Road on Thursday, July 17 at 11.00am.